LONDON–(BUSINESS WIRE)–Technavio analysts forecast the leather and allied product market in Bosnia and Herzegovina to grow at a CAGR of close to 4% during the forecast period, according to their latest report.

The research study covers the present scenario and growth prospects of the leather and allied product market in Bosnia and Herzegovina for 2016-2020. The report categorizes the leather and allied products market in Bosnia and Herzegovina into two main segments which are:

• Tanned and dressed leather, and dressed and dyed fur
• Luggage, handbags, saddlery, and harnesses

In terms of revenue, the tanned and dressed leather, and dressed and dyed fur segment accounted for 88% of the market share in 2015.

Technavio chemicals and materials analysts highlight the following three factors that are contributing to the growth of the leather and allied product market in Bosnia and Herzegovina:

• Increase in consumer spending
• Favorable investment destination
• Provision of employment opportunities

Increase in consumer spending

Improving economic conditions in Bosnia and Herzegovina have provided a fresh impetus to consumer spending in the country. There has also been an increase in foreign investments, imports of raw hides, and production capacities of tanned/dressed leather. There has been a two-fold to over five-fold growth in the revenues generated from the sales of products such as handbags, suitcases, briefcases, and school satchels between 2010 and 2015.

Between 2010 and 2014, the demand for handbags increased by 27% and demand for leather cases increased by 20%, and the revenue generated from the sales of these products increased by approximately 50% and 400%, respectively. These figures are inclusive of sales in both domestic and foreign markets. “Such an increase in consumer spending is expected to drive the growth of manufacturers in the leather and allied products market in Bosnia and Herzegovina,” says Chandrakumar Badala Jagnathan, a lead analyst at Technavio for bio-chemicals and bio-materials research.

Favorable investment destination

The proximity of Bosnia and Herzegovina to major textile and leather markets, such as France, Germany, Italy, and Spain, as well as the ability of its manufacturers to accept orders at short notice and deliver finished products quickly are factors that have been instrumental in enabling the market to retain its foreign investor base. Moreover, the country has an abundant supply of cheap skilled labor given its longstanding textile manufacturing traditions. These factors make the country a favorable investment destination.

In addition, Bosnia and Herzegovina is a potential candidate for accession to the EU. Since 2008, when the country signed the Stabilization and Association Agreement (SAA) and the Interim Agreement on Trade and Trade-related Issues with the EU, exports to these regions have been granted exemptions in import and export duties. The EU is now the region’s most important import and export partner. The country’s membership in Central European Free Trade Agreement (CEFTA) also provides advantages such as a consistent demand for products. These factors together make the country a favorable destination for investors.

Provision of employment opportunities

The textile and leather manufacturing industry has always been vital to the economy of Bosnia and Herzegovina, as it is labor intensive and, therefore, serves as a source of employment. Unemployment rates stood at 42% in 2015. The same year, unemployment rates among women stood at 31% (despite the fact that 97% of women in the country are literate), and they accounted for only one-third of the total labor force in the country.

“Since the leather industry is extremely labor intensive and the majority of the workforce in this market consists of women, the promotion of this industry is a key area of focus for the government. This backing by the government is a crucial factor in ensuring a favorable trade environment and inflow of fresh investments,” says Chandrakumar.

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